In an effort to stimulate financial activity, family businesses in Kuwait should be encouraged to sell shares on the country’s fledgling stock market, which is also trying to attract foreign investments in an effort to expand, according to the country’s Minister of Commerce and Industry Khaled Al-Roudhan.
“We think we have the muscles, the know-how, and all the opportunity to become a commercial hub,” Al-Roudhan said recently. “We’re trying to improve our business environment not only for foreigners but for Kuwaitis too.”
Kuwait is working to help the exchange grow, the Minister said, touting upcoming IPOs, a “very ambitious” development programme by the Capital Markets Authority focused on accessibility for foreign investors, as well as the lack of foreign ownership limits.
The Capital Markets Authority will start a public offering of its 50 per cent stake in Boursa Kuwait next month, making it the second publicly traded exchange in the Gulf after Dubai. “This will enhance its profile further and increase its competitiveness,” according to Al-Roudhan.
MSCI will add Kuwait to its main index tracking stocks in emerging markets in June 2020, once some trading mechanisms are improved, in an upgrade that has been priced in by investors anticipating billions of dollars of inflows.
More high-profile listings can be gained by “speeding up the privatisation programme and public-partnership project implementation,” Al-Roudhan noted.
The Minister confirmed that foreign investments of $1.5bn entered the country as a result of the capital market upgrading to the EM category in the FTSE index and, he noted a further $2.5 billion is expected to be added to that after the official upgrade of MSCI.
Meanwhile, S&P Dow Jones’s upgrade of Kuwait to an emerging market will clearly encourage more foreign investment. By creating a new financial path to bring more foreign investors to the area and with six laws in the pipeline to help boost investment and commerce, including an insolvency law, import law and competition protection law, hopes are high that foreign direct investment (FDI), that reached $3.2bn between 2015 and March 2019, under the auspices of the Kuwait Direct Investment Promotion Authority, will see a further substantial boost to its fortunes.
As part of a drive to open up the country and become a commercial and financial hub for region, Kuwait is working closely with Iraq to boost trade. A joint economic committee formed in 2014 met recently for the first time. “We think there’s big room to improve the economic relationship with Iraq,” noted Al-Roudhan. “Our trade with Iraq is below expectations but what we have tried to do is to separate political issues from economic matters, I think this will be of benefit to both countries.”
Under former president Saddam Hussein, Iraq invaded Kuwait in August 1990, occupying it for almost seven months before being ousted by a U.S.-led coalition. Both sides have signed a free-trade agreement and established a free-trade zone near the Safwan border, which Kuwait has agreed to finance and build.